Thanks for this explanation! I didn't roll it over, I cashed it out completely (I know, probably not the smartest financial move, but I needed the money for some home repairs). So it sounds like I should definitely be reporting this on my 2024 taxes regardless of what TurboTax is saying? I'm wondering if I somehow answered one of their questions wrong during the interview process.

Yes, you absolutely need to report it on your 2024 taxes (filed in 2025). Since you cashed it out completely and didn't roll it over, it's a taxable distribution in the year it was distributed. I suspect you might have accidentally indicated it was a rollover when answering TurboTax's questions, or there might be some other confusion in how you're navigating the software. I'd recommend starting over with entering that 1099-R and carefully reading each question. If TurboTax still gives you the same guidance, you should contact their support because that would definitely be incorrect advice for your situation.

This is a really good point! I've made this exact mistake before. The tax software naming conventions can be super confusing because they're labeled with the tax year, not the year you're using them in.

The problem with checking that box is it often withholds too much if your incomes aren't exactly equal. I found it better to use the irs withholding calculator online and follow its recommendations instead of the worksheet.

That's a fair point. The checkbox method is definitely a rough estimate. The calculator is more precise, especially if one spouse makes significantly more than the other. I've found the worksheet reasonable when our incomes are within about 20% of each other, but anything beyond that and the calculator is definitely the way to go.

This is good advice. I target about $500 refund as a buffer. Also remember that if you owe more than $1000 at tax time AND didn't have at least 90% of your tax liability withheld throughout the year (or 100% of last year's tax), you could face underpayment penalties.

How would you determine if it's royalty income vs. other types of payments? The 1099-NEC doesn't really specify the nature of the payment, just the amount.

You'd need to look at supporting documentation from the union explaining the nature of the payments. Ask your client for any letters, statements, or the original agreement with the union that established these payments. The description might use terms like "residuals," "royalties," or "use of intellectual property." Also check Box 1 of the 1099-NEC to see if there's any description near the amount. Some payers will include a brief memo there. If there's nothing there, your client should contact the union's benefits office directly and ask for a written explanation of what these payments represent.

That's why I stopped going to those tax prep chains. They charged my mom $350 to file a return that literally only had Social Security income on it. Total scam.

Would this work for crypto? I've got some ETH that's gone up like crazy and I'm trying to figure out how to cash some out without giving half to Uncle Sam.

Yes, it can work for cryptocurrency. The key is that the trust sells it after you've donated it, so the trust itself doesn't pay capital gains tax on the appreciation. You'll need to find a trustee comfortable with handling crypto assets though, as some traditional trustees aren't familiar with the process. Keep in mind that you're ultimately giving a portion to charity - this isn't a strategy to avoid taxes completely while keeping all the money. But the tax benefits plus the income stream can make the math very favorable compared to just selling and paying capital gains tax directly.

I looked into something similar for my business. The Wyoming LLC part can work for privacy and some liability protection, but it doesn't magically change your tax situation. The IRS follows the money regardless of how many entities you put in between. And trying to loan yourself money through your own entities gets really tricky really fast.

Thanks for this! Would I just list "temp worker" as my business on the Schedule C? And for the home office, do I need to have a dedicated room or can it be like a desk in my bedroom? I'm worried about getting audited if I claim too much.

You can list "Telecommunications Contractor" or something similar as your business. For home office, the IRS prefers a dedicated space, but it doesn't have to be an entire room - a dedicated desk area that's used regularly and exclusively for work can qualify. Just measure that specific area for your deduction calculation. Don't worry too much about an audit if you're claiming legitimate expenses. Just keep good records of your expenses and be reasonable with your deductions. For example, don't claim 100% of your internet if you also use it for personal stuff - 30-50% is more reasonable depending on how much you use it for work.

This is such important advice! I learned this the hard way too. The IRS expects you to pay as you earn throughout the year. I got hit with penalties my first year as a contractor because I didn't know about quarterly payments.